RHI: Repeat Hiatus Indefinitely?

Another day another strategy. This time it’s ‘the Future of Heating: `Meeting the Challenge’, published by DECC on Tuesday last. It’s all pretty good stuff, to be honest, and claims, as Ed Davey writes in the forward, that ‘there has been a historic failure to get to grips with one part of the energy jigsaw: the supply of low carbon heat… this document plugs that hole’.

And in plugging that hole, the document announces that ‘in November 2011, the Government launched the world’s first renewable heat incentive, paying tariffs to non-domestic heating systems that use renewable sources of heating’ … and … ‘has consulted on Renewable Heat Incentive tariffs for domestic buildings’ … ‘Details of tariff levels and eligibility are expected to be published this summer.’

So there you are then. The ‘world’s first’ RHI is to be extended to domestic properties, and we’re going to find out soon what the exact programme will consist of, so that we can gear up for the scheme coming to a property near us (or maybe even our own properties). Sounds like a winner.

Except, of course that it isn’t, as a rather shamefaced written statement issued on the same day alongside the spanking new document recounted. It announced that:

‘We intend to announce the final details of the domestic and expansions to the non-domestic RHI in summer 2013 and open the schemes for payment from spring 2014. To provide continued support to the domestic renewable heat market in the interim period we will extend the renewable heat premium payment scheme for a further year to March 2014 with the same level of support as in 2012-13.’

Hold on a minute! Final details? Continued support? Well yes, that refers to the continuation of the Renewable Heat Premium Payment. This is a grant given to domestic renewable heat installers in lieu of tariffs, from when the domestic properties Renewable Heat Incentive was supposed to have started last year, alongside the Green Deal. And that, in itself was a considerable delay on the legislative passage of the Renewable Heat Incentive, passed into law in the Energy Act 2009, alongside the Feed in Tariff for renewable electricity which it was supposed to have been introduced alongside. So now the grant system its being extended for another year, whilst the tariff rate is worked out. And what was the Renewable Heat Incentive for domestic properties supposed to have replaced ? Well, a … er… grant system, called the Low Carbon Building Programme which provided some up front grant funding to offset the cost of installing renewable heat, among other things. And it provided quite a lot of support for pellet operated boilers, and ground source heat pumps. Shame it was taken away, but then replacing it with a tariff system … I think you get the idea.

So to summarise, the RHI replaced the old grant system for domestic properties, except it didn’t, and except it caused a hiatus in grants until they were replaced last year, and now it won’t replace a restored grants system until next year; and meanwhile no-one knows what the tariffs will actually be.

Oh, and the budgets for Renewable Heat Incentive which were originally intended to be funded from levies were replaced with funding from general taxation and disappear back to Treasury each year they are underspent which, with the delays in domestic RHI among other things , they have been to the tune of about 90%. So not really very much progress on the ‘target’ in the Renewable Energy Roadmap, of 600,000 heat pumps installed by 2020, and of renewable heat making up about 15% of overall renewable energy.

Altogether not quite the ‘way forward’ set out by the ‘Future of Heating.’ On the contrary more than a bit of a shambles. It is difficult to see quite why, with the time that has elapsed, DECC still do not seem to have a clear idea of what tariffs for domestic renewable heat installations will be, or indeed how they will be measured for the issuing of support on the basis of those tariffs. And meanwhile, some very good technology and some hitherto quite achievable targets on heat languish through inaction.

Given that deployment is falling so much short of budgets, and that money disappears each year when it is not spent, I would have thought that a programme of getting domestic renewable heat kick-started might consist of paying a double grant over at least the next year, so that people have the confidence to get installing. It would after all be a nil net cost, because it always has been the intention of the RHI to recover ‘temporary’ Renewable Heating Premium Payments from the RHI tariff once established. Or if DECC were a little more adventurous, simply to return to something like low carbon building grants for the next few years. Either way at least something would happen. Putting out up-beat strategies in documents that are immediately countered by statements instituting delays that can only move in the opposite direction from the strategy statements will, on the other hand, almost certainly ensure that nothing does.